Merrill’s Hartnett says buy the market when S&P 500 hits 2,500

Bank of America Merrill Lynch chief investment strategist Michael Hartnett said it should be time to buy the S&P 500 when it nears 2,500 and the 10-year Treasury when the yield reaches 3 percent.

“My gut here is 2,500 and 3 percent on the 10-year. They are big, big levels. You expect the market to find a reason to buy at that particular moment,” he said.

Hartnett, who has been calling for a correction, said the market should find a floor quickly but that it will have to retest that floor. A spot many strategists have been watching on the S&P 500 is the 200-day moving average, seen as the next technical zone to be tested. That is 2,538 on the S&P. The index dropped through it Friday afternoon.

Hartnett said there is a series of events that need to occur before the market sell-off is over.

“Maybe we need to see the dollar move up and that’s the thing that causes investors to do things they least like to do: sell winners — tech, high yield, emerging markets. In these corrections, you sell hubris and buy humiliation. One measure of humiliation is everything goes through the wringer. Nothing is left unscathed,” he said.